Case Study

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1. What is competition like in the North American Wholesale club industry? Which of the five competitive forces is strongest and why? Competition in the Wholesale club industry is pretty small. The spread of the share of the market is pretty much dominated by Sam’s Club and Costco; 36% and 56% respectively. The competition is there, but not between each other. While the Wholesale clubs have lower prices and larger quantities, they lack in other areas which sometimes drive consumers away from them and towards other stores such as Wal-Mart, Best Buy, and other such retailers. But some of those things that scare away the consumer from Wholesale clubs, attract other kinds of consumers, which then deter them from shopping at the non-wholesale clubs. I would personally say that, of the five forces, the substitution from other industries would be the strongest. Wholesale clubs offer similar products in a sense, although it is the same product simply in larger quantities, or obviously, wholesale instead, which drives the price down. Which then could almost tie up with the buyers competitive force, which is where the wholesale clubs buy their products from, direct, which makes that middle man non-existent, and increases profit margins. 2. Do all three warehouse club rivals have highly similar strategies? What differences in strategies are apparent? Does one rival have a better strategy than others? Does one rival have a somewhat weaker strategy? It seems that Costco and Sam’s Club are more similar with a strategy to have great products at the lowest prices, similar to most other companies in general. BJ’s offered those products at low prices but also tried to incorporate more products, some smaller sizes and a little more focus on the customer by giving them the convenience of aisle markers, self-checkouts, and express lanes. I feel that in terms of the bottom

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